The Market Gave Us an Audit Last Two Weeks

Last two weeks, the market went through a correction, especially on AI stocks.

S&P 500 is down 2.7%.

QQQ is down 6.7%.

Semiconductor ETF SOXX is down 14.6%

My portfolio is also down 5.8%.

If you looked at your portfolio or your open positions, chances are you felt that familiar tightness in your chest. The natural reaction during a sharp drawdown is either freezing up hoping it passes, or getting emotional and forcing moves to make the discomfort stop.

Both reactions come from the same place. We treat market moves like something happening to us personally.

I spent the last few days reviewing my own investing strategies and talking with seasoned investors. One lesson kept repeating itself:

You have to stay open to reviewing and improving your system whenever the environment shifts.

When the market only moves in your favor, almost any strategy looks brilliant. Loose risk management masquerades as conviction. Oversized positions look like confidence. Easy conditions hide sloppy habits.

Every correction is an audit.

The market simply shows you where your assumptions were fragile. Did you follow your sizing rules? Did you take profits when they were on the table, or did you hold out for the absolute top? Did you keep cash ready, or were you fully exposed?

For me, a few tweaks I am making to my investment strategies:

• paying more attention to the daily timeframe while using the weekly timeframe for general trends
• being more selective and patient in my entry criteria
• add more hedging to my overall portfolio (see how I hedged my GOOG here)
• watch out for emotions when I "feel" I have to "do" something

Experienced investors do not panic when the weather turns. They do not get defensive or change everything they are doing. They look at their numbers without ego and ask what the process needs right now.

Confidence comes from having a process you are willing to inspect, test, and refine every time conditions change.

If last week tested your positions, take what it showed you seriously.

Step back from the screen, review your personal rules, and tighten the process for the next round.

That is how a rough week turns into lasting discipline.